What is a Terminated Merchant File?

Ever wondered how simple missteps in handling credit card transactions can hurt your business? One such case – especially for a high-risk merchant – is landing on a Terminated Merchant File or MATCH list. Understanding the rules of the game is crucial not just for compliance but also to safeguard your business. In this article, we’ll guide you through:
  • What a terminated merchant file (TMF) is.
  • How it differs from and resembles the MATCH list.
  • Reasons why merchant accounts get terminated.
More importantly, you’ll learn practical ways to avoid these pitfalls and, if necessary, how to navigate off these dreaded lists.

What is a Terminated Merchant File (TMF)?

A Terminated Merchant File (TMF) is like a blacklist for businesses that handle credit cards. Acquiring banks and credit card processors use it to keep track of businesses that pose a high risk. If a business breaks their agreement or has too many fraud cases or customer complaints (called chargebacks), they get put on this list. Being on the TMF can have significant consequences, namely:
  1. It signals to other processors and banks that the merchant has been flagged for risky behavior.
  2. Makes it extremely challenging to secure another merchant account or payment processor.
It’s important to know about TMF because it can affect a business for a long time. Once listed, a merchant’s information typically remains on the TMF list for five years.

Are TMF & MATCH lists the same?

The acquiring bank estimates the risks of each of its clients’ businesses. In this regard, there are many different reasons why a merchant’s account may be terminated. Let’s su The terms “Terminated Merchant File (TMF)” and “MATCH list” are often used interchangeably, but they’re a bit different. The TMF was an older database created by Mastercard for merchants whose accounts were terminated for reasons like fraudulent activity, excessive chargebacks, or breaches of agreement. In 2005, it evolved into the MATCH (Member Alert to Control High-Risk) list, a more comprehensive tool jointly managed by Mastercard and Visa. Both lists are used to mark businesses that might be risky, but the MATCH list is used more today. It includes a specific reason code for each merchant’s listing, detailing why an account was terminated. Acquirer banks and credit card processors look at this list to evaluate the risk of taking on a new merchant.

Why do merchant accounts get terminated?

Merchant account termination can be a significant setback for any business relying on credit card transactions, but especially those operating in high-risk industries. High-risk industries are prone to higher-than-average chargeback rates and regulatory scrutiny. They face unique challenges that can lead to account termination, such as:
  • Excessive chargeback rates
  • Fraudulent activity
  • Regulatory compliance issues
  • Compromised account data
  • Bankruptcy, liquidation, or insolvency
  • Identity theft
  • Illegal transactions
Knowing these risks helps businesses in high-risk areas keep their accounts safe. The next step is knowing how to avoid landing on a terminated merchant file credit card list.

How to avoid being added to the MATCH list?

For merchants in high-risk industries, chargebacks are the primary culprit in being added to the MATCH list or even account termination.

Excessive chargebacks

A chargeback happens when a customer doesn’t agree with a charge on their card and asks the bank for a refund. This can happen for various reasons:
  • Unauthorized use of the card
  • Dissatisfaction with a product or service
  • Unmet delivery promises.
The chargeback ratio is important – it’s the number of chargebacks compared to total sales. Banks and companies that handle credit card payments often have a limit (like 1%), and if a business goes over this, it’s seen as risky. Let’s look at some ways to reduce excessive chargebacks and safeguard your business.

Tips for avoiding the MATCH list

Below are 5 tips for how you can steer clear of this risk and maintain a reputable standing.
  1. Reduce the potential for fraud and chargebacks: Implement clear refund policies, uphold excellent customer service, and use fraud prevention tools to keep chargebacks in check.
  2. Stay compliant and updated on regulations: Periodic compliance checks can prevent violations that lead to MATCH listing.
  3. Invest in advanced fraud detection systems: Regularly review transactions and employ verification methods to minimize fraudulent activities.
  4. Maintain transparent business practices: Ensure all your transactions are well-documented. Misrepresentation or hiding business activities can lead to MATCH listing.
  5. Address inquiries quickly: If your merchant account provider or acquirer bank raises concerns, address them promptly and efficiently. Open communication can often prevent misunderstandings that might lead to a MATCH listing.

How can you get yourself removed from the TMF or MATCH list?

Getting off the TMF or MATCH list is hard, especially because you’re usually on it for 5 years. However, there are two main avenues to expedite removal from these lists.
  1. Acquirer Intervention: If you were wrongly added to the list, you can ask the company that put you there to tell the bank it was a mistake.
  2. Compliance with PCI-DSS: If you were added for not following the Payment Card Industry Data Security Standard (PCI-DSS), getting compliant can help get you off the list. This means making sure your business follows all the security rules and working with a security expert.
In both scenarios, proactive engagement, thorough documentation, and compliance are key.

Protect your merchant account with PayFasto

If you’re running a high-risk business, you need to be especially cautious about credit card payments. Getting on lists like the Terminated Merchant File (TMF) or MATCH can make things tough. But don’t worry, PayFasto is here to help! We watch your sales closely. If we see something that might turn into a chargeback, we tell you quickly. This helps keep your business in good shape. We have strong systems to check for any funny business with your sales. This keeps your account safe from fraudulent or suspicious activities. We make sure all your sales are recorded properly. If there’s ever a problem, good records can really help. Staying off the MATCH list is important. With PayFasto’s help, your business can stay safe and do well, even in the tricky world of high-risk credit card processing.

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